Clawback Provisions

Clawback provisions are contractual clauses that allow a company to reclaim bonuses or incentives from employees under certain conditions. Typically used in executive compensation, these provisions can be activated if financial results are later discovered to be inaccurate or if an employee engages in misconduct. Essentially, if an employee is found to have benefited unfairly or unethically, the company can "claw back" the money to ensure accountability and protect shareholders' interests. This helps maintain fairness in compensation practices and encourages ethical behavior within organizations.